Reengineering & Restructuring at Canon|Business Strategy|Case Study|Case Studies

Reengineering & Restructuring at Canon

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Case Details:

Case Code : BSTR091
Case Length : 19 Pages
Period : 1990 - 2003
Organization : Canon Inc
Pub Date : 2004
Teaching Note : Available
Countries : Japan
Industry : Office Equipment

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Canon Under Fujio Mitarai

When Fujio took over as president of Canon, the company was structured in different divisions based on the product lines with each product division working as a separate entity. Though Canon had a wide range of products, it was not earning profits in all its product segments. The company was making losses in PCs, liquid crystal displays, optical memory cards, calculators and electric typewriters. There was no coordination among the different divisions in the company.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

So much freedom was given to each division that right from hiring people to setting up overseas plants, they acted independently and without coordinating with the other divisions.

In an interview with BusinessWeek, Fujio said, "These [profitable] divisions had become so independent, they didn't think in terms of what would benefit the entire company. It got to the point where divisions were building separate plants in China at the same time. If they had planned it centrally and moved to China together, they could have combined their costs. As it turned out, it cost Canon twice as much because these divisions...functioned like separate companies..."

Excellent Global Corporation - Phase I

In Phase I, Canon decided to exit from its loss-making businesses of PCs, optical memory cards and calculators. However, Canon did not opt for employee lay off and it stood by the Japanese principle of lifelong employment within the country.

Instead of lay offs, Canon stopped recruitment of contract workers and transferred workers from its loss-making divisions to other product divisions.

Canon announced that it would focus on products where it could achieve No. 1 position in the industry (it was already number one in cameras, and color and black & white midrange copiers).

Under Fujio, Canon shifted its focus from market share to profitability. It also realized the importance of taking the whole group into consideration rather than focusing only on individual product divisions. In 1996, Fujio introduced consolidated balance sheets for all group companies...

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